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Kuwait Considers Reducing Iraq's Debt Following Meeting with US Envoy

The government of Kuwait has agreed to begin talks about negotiating Iraq's debt, following a meeting with U.S. special envoy James Baker. Mr. Baker is on his way to Saudi Arabia next as part of his trip to convince countries to relieve Iraqi debt.

Kuwait's prime minister said his country would consider reducing the amount of debt Iraq owes, but that any deal would have to be approved by the Kuwaiti parliament.

Sheikh Sabah al Ahmed al Sabah told Mr. Baker that Kuwait would work with other countries in the region toward an effective reduction of Iraq's debt. He said Kuwait would begin negotiations on the condition that the results of those talks are accepted by an internationally recognized Iraqi government.

Unofficial estimates put the amount of Iraqi debt to Kuwait at about $16 billion.

Mr. Baker, who is the U.S. special envoy to Iraq on matters of foreign debt, is scheduled to meet with Saudi officials next.

Saudi Arabia, which claims Iraq owes about $30 billion, has pledged not to negotiate until an independent Iraqi government is in place.

On Tuesday, the Gulf states of Qatar and the United Arab Emirates agreed to write off most of the more than $7 billion Iraq owes both countries.

An administration official who is traveling with Mr. Baker called the talks an important step forward.

Iraq owes tens-of-billions of dollars to Gulf states, most of which was accrued during the Iran-Iraq war in the 1980s. Overall, Iraq is an estimated $120 billion in debt, making it most heavily indebted country, per capita, in the world.

U.S. officials believe that erasing the majority of Iraq's debt is a key factor in rebuilding that nation's economy.

Mr. Baker has already secured pledges from Japan, China, Italy, Germany and France to waive or reduce the money Iraq owes them.